Did you unzip the rom twice? if not download it, unzip it, then with the unzipped file change the name at the end to zip and it should change back to a zip file again. Unzip that one and try again.
Edit. Just read your edit, glad you got it sorted.
Yeah got it sorted. I think it was a combination of:
1) Me having to use the fastboot rom rather than the rom I downloaded from the Xiaomi website. If I used the flash tool with the Xiaomi official rom, it couldn't find a .bat file that was only included with the fastboot rom.
2) Even when I unzipped twice (caught me out the first time) the tool still wouldn't work with the flashboot rom. Then I realised it was due to the path to the folder having a space in it which it didn't like. Ran it from the Desktop and all was well.
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